Money that is cash back from a credit card.

Smart Ways To Use Your Credit Cards

Usually when we talk about credit cards, it is in relation to getting out of debt. Yes, they can be a real problem for many people. But, did you know that they can also be a very valuable financial tool? Take a look at some of the ways that you can use your credit cards to actually improve your finances.

Maximize Your Cash Back

This is the most obvious way to make money on credit cards, but few people take full advantage.

Spend As Much On Credit As You Can

You do not want to spend money on things that you do not need, but you might be surprised at just how many of your monthly bills you can pay with a credit card.

Food and gas are obvious targets. Others include your car insurance bill, utilities and, if you rent, you might even be able to put it on credit. Just make sure that paying your bill with credit does not cause you to incur “convenience fees”. These are usually around 2 percent of a transaction and will negate your cash back rewards.

Also, keep in mind that most cards have a maximum cash back. Once you reach it, stop using your card or switch to another rewards card.

Choose The Right Categories

Many credit cards will pay you 1 percent on all purchases and more on specific categories. It could be 2 percent or even as high as 5 percent, so you need to maximize your spend in these categories.

Do use caution to make sure that you are only making regular purchases with your credit cards. Some of the high cash back could be items such as fuel that you buy regularly. Others might be for restaurants, concerts or other items that are usually not on your radar.

Pay Your Cards In Full

The reason that card issuers give you these rewards is to get you to spend and carry a balance. It obviously works or else they would stop offering cash back offers. Make sure that you do not fall for the trap. Pay your cards off in full each month.

Take Advantage Of Bonuses

Credit card companies like to find ways to lure you in, often with attractive bonuses. They unfortunately come with some catches though, usually in the form of a minimum spend.

Here is how it works. Card A wants to give you a $200 bonus but in the first two months you need $2000 in purchases to qualify. This isn’t always as easy as it sounds, so it may take some work.

The trick is to think outside of the box. There are a lot of regular purchases that you can put on credit cards, so go beyond food and fuel. Also look at your electric bill, cellular phone bill and medical payments. Take a look at every expense in your budget and see if it can be paid by credit card, without a convenience fee.

Once again, do remember to pay off your cards when you get the statement. The obvious end goal for credit card issuers here is to get you to charge up your account and carry a balance.

Negotiate Annual Fees

Nobody likes an annual fee, but believe it or not you may be able to negotiate the fee. Some companies will reduce or even eliminate the fee, if you just ask.

Call Customer Service

You first step should be to call customer service and simply ask them to remove the fee. If a company believes that they are going to lose you as a customer, they might be inclined to reduce or waive a fee, so be prepared to threaten to cancel. Also, keep in mind that it is usually a one time thing. The fee will most likely return the next year so you will have to call again.

Look At The Benefit

If you are unable to have the fee completely removed, look at the benefit of the card before you cancel it. Compare the fee to the perks and see which is greater. A $79 annual fee might not be that bad if you will get $500 back from a juicy 5 percent cash back offer.

Use All The Benefits

Credit cards offer you more than just cash back. Of course, “cash is king” but these other things are nice too. Not all cards offer all of these benefits, so check with your card issuer for details. Take a look at some common card benefits that you might not know about.

Trip Insurance

Have to cancel a trip due to an emergency or an illness? This is money that would be lost unless your card comes with trip insurance. Surprisingly, a lot of them do.

Car Rental Insurance

If your card comes with free car rental insurance, you can skip the expensive coverage offered from the rental company. For those of you who travel often, this can easily add up to over 200 dollars in cash savings a year.

Free Tickets

Who doesn’t like free tickets, and many cards provide them. Bank of America, for example will get you a free museum ticket with their ‘Museums on Us” program.

Extended Warranties

Purchase a new TV and your 1 year warranty could become a 2 year one. This can be big money saved when you look at what the store wants to charge you.

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